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“capital expenditure”

Business ExpensesSection 37Section 373,515 judgments

The decision most relied on for capital expenditure is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on capital expenditure

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
227 ITR 172 · 1997 · Supreme Court
621
citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Madras Industrial Investment Corporation Ltd. v. CIT
225 ITR 802 · 1997 · Supreme Court
568
citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

South Indian Bank Ltd. v. CIT
438 ITR 1 · 2021 · Supreme Court
508
citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Institute of Banking Personnel Selection
264 ITR 110 · 2003 · High Court
398
citing judgments

Depreciation is allowable on assets for which the cost has been fully allowed as an application of income under Section 11 in previous years, when computing the income of a charitable trust. Charitable trusts are also entitled to carry forward their deficit.

Taparia Tools Ltd. v. JCIT
372 ITR 605 · 2015 · Supreme Court
343
citing judgments

An expenditure does not automatically become capital in nature merely because it results in some enduring benefit for the assessee; it can be treated as revenue expenditure if incurred for genuine business purposes.

Biocon Ltd. v. DCIT
35 Taxmann.com 335 · 2013 · ITAT
322
citing judgments

The discount arising from the grant of Employee Stock Option Plans (ESOPs) is an allowable business expenditure under Section 37(1) of the Income-tax Act, 1961, as it is an ascertained liability, not a contingent one, and constitutes a revenue expense rather than a capital expense.

Alembic Chemical Works Co. Ltd. v. CIT
177 ITR 377 · 1989 · Supreme Court
275
citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

Judgments citing capital expenditure

DCIT, Circle-8, Pune vs. Mahle Anand Thermal Systems Pvt. Ltd., Pune

ITA 228/PUN/2024[2017-18]Status: DisposedITAT Pune22 Jan 2025AY 2017-18

Bench: Shri R. K. Panda & Ms. Astha Chandra

For Appellant: Shri R D OnkarFor Respondent: Shri Amol Khairnar CIT-DR
Section 143(3)Section 35Section 35(1)(iv)

being the weighted deduction u/s 35(2AB) of the Act and Rs.1,04,77,500/- being the Product Development expenses treating the same as Capital Expenditure as against Revenue expenditure claimed by the assessee. The Assessing Officer while making the disallowance u/s 35(2AB) followed the decision of the Ahmedabad ... National Rayon Corporation ltd. (140 ITR 143) and other decisions. 3. So far as the disallowance of Product Development expenditure treating the same as capital expenditure is concerned, he followed the decision in assessee's own case for assessment years 2006-07 to 2008-09. 4 ITA No.127/PUN/2024 ITA No.333/PUN/2024

DCIT, Circle-8, Pune vs. Mahale Anand Thermal Systems Pvt. Ltd., Pune

In the result, the appeal and the CO filed by the assessee are partly allowed and the appeals filed by the Revenue are dismissed

ITA 127/PUN/2024[2014-15]Status: DisposedITAT Pune22 Jan 2025AY 2014-15

Bench: Shri R. K. Panda & Ms. Astha Chandraassessment Year : 2014-15

For Appellant: Shri R D OnkarFor Respondent: Shri Amol Khairnar CIT-DR
Section 143(3)Section 35Section 35(1)(iv)

being the weighted deduction u/s 35(2AB) of the Act and Rs.1,04,77,500/- being the Product Development expenses treating the same as Capital Expenditure as against Revenue expenditure claimed by the assessee. The Assessing Officer while making the disallowance u/s 35(2AB) followed the decision of the Ahmedabad ... National Rayon Corporation ltd. (140 ITR 143) and other decisions. 3. So far as the disallowance of Product Development expenditure treating the same as capital expenditure is concerned, he followed the decision in assessee’s own case for assessment years 2006-07 to 2008-09. CO No.12/PUN/2024

M/S Tdk India Pvt. Ltd.(Formerly Known As M/S Epcos India Pvt. Ltd.), Kolkata vs. DCIT, Cir. 11(1), Kolkata

In the result, both the appeal of the assessee are partly allowed for statistical

ITA 282/KOL/2022[2017-18]Status: DisposedITAT Kolkata22 Jan 2025AY 2017-18

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 144C(5)Section 92C

Commercial Borrowings(ECB) and corresponding principal only swap and forward exchange contract by way of conversion into equity shares. Such amount was reported as capital expenditure under clause 21a of the Tax Audit Report since the inception. Out of the aforesaid sum of Rs.12,77,92,261/-, Rs.7

M/S Tdk India Limited (Formerly Known As Epcos India Pvt. Ltd.), Kolkata vs. DCIT, Cir. -11(1), Kolkata

In the result, both the appeal of the assessee are partly allowed for statistical purposes

ITA 203/KOL/2021[2016-17]Status: DisposedITAT Kolkata22 Jan 2025AY 2016-17

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 144C(5)Section 92C

Commercial Borrowings(ECB) and corresponding principal only swap and forward exchange contract by way of conversion into equity shares. Such amount was reported as capital expenditure under clause 21a of the Tax Audit Report since the inception. Out of the aforesaid

Deputy Commissioner of Income Tax 13(1)(2), Mumbai vs. Olive Bar & Kitchen Private Limited, Mumbai

In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed for statistical purposes

ITA 6255/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2025AY 2017-18

Bench: Shri Amit Shukla & Smt. Renu Jauhriolive Bar & Kitchen Pvt. V/S. Acit, Circle-13(1)(1), बनाम Ltd. Mumbai 14 Union Park, Palli Hill Maharashtra-400020 Tourist Hotel Pvt. Ltd, Palli Hill Road, Khar West, Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी .. Respondent/प्रतिवादी Dcit, Circle-13(1)(2), V/S. Olive Bar & Kitchen Pvt. Mumbai बनाम Ltd. R. No. 218, Aayakar 14 Union Park, Palli Hill Bhavan, M K Road, Tourist Hotel Pvt. Ltd, Mumbai, Palli Hill Road, Khar West, Maharashtra-400020 Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी Respondent/प्रतिवादी ..

For Appellant: Shri Mahesh RajoraFor Respondent: Shri Mahesh Pmnani
Section 250Section 35D(1)(ii)Section 36(1)(iii)Section 36(1)(lit)Section 37(1)

Rs.44,10,304/- [out of total disallowance of Rs.2,09,67,669/- made by the AO] on the ground that the expenses are capital expenditure not deductible u's 37(1) of the Act. The Appellant submits that the pre-operative expenses were incurred after setting up of its business ... Income Tax Act, 1961 to the extent mentioned therein and section 37(1) of the Income Tax Act also does not allow any capital expenditure. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the disallowance made

Olive Bar and Kitchen Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Circle - 13(1)(1), Mumbai

In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed for statistical purposes

ITA 5924/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2025AY 2017-18

Bench: Shri Amit Shukla & Smt. Renu Jauhriolive Bar & Kitchen Pvt. V/S. Acit, Circle-13(1)(1), बनाम Ltd. Mumbai 14 Union Park, Palli Hill Maharashtra-400020 Tourist Hotel Pvt. Ltd, Palli Hill Road, Khar West, Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी .. Respondent/प्रतिवादी Dcit, Circle-13(1)(2), V/S. Olive Bar & Kitchen Pvt. Mumbai बनाम Ltd. R. No. 218, Aayakar 14 Union Park, Palli Hill Bhavan, M K Road, Tourist Hotel Pvt. Ltd, Mumbai, Palli Hill Road, Khar West, Maharashtra-400020 Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaco5346G Appellant/अपीलार्थी Respondent/प्रतिवादी ..

For Appellant: Shri Mahesh RajoraFor Respondent: Shri Mahesh Pmnani
Section 250Section 35D(1)(ii)Section 36(1)(iii)Section 36(1)(lit)Section 37(1)

Rs.44,10,304/- [out of total disallowance of Rs.2,09,67,669/- made by the AO] on the ground that the expenses are capital expenditure not deductible u's 37(1) of the Act. The Appellant submits that the pre-operative expenses were incurred after setting up of its business ... Income Tax Act, 1961 to the extent mentioned therein and section 37(1) of the Income Tax Act also does not allow any capital expenditure. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the disallowance made

Smt. Usha Sharma, New Delhi vs. DCIT, New Delhi

In the result, both the captioned appeals of the assessee are allowed for statistical purposes

ITA 480/DEL/2015[2012-13]Status: DisposedITAT Delhi22 Jan 2025AY 2012-13

Bench: Shri M. Balaganesh & Sh. Yogesh Kumar U.S.Eagle Hunter Solutions Vs Commissioner Of Income Limited Tax (Appeals)-25 61C, Kalu Sarai, Sarvapriya New Delhi Vihar, New Delhi-110016 Pan: Aabce0565E Appellant Respondent

Section 143(1)Section 143(3)Section 2(24)(x)Section 270A(2)Section 270A(2)(a)Section 36(1)

nature of expenditure prescribed in Sect ions 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduct ion of expenditure under the general clause of Sect

Jil Information Technology Limited, New Delhi vs. Additional Commissioner of Income Tax, Lucknow

In the result, the appeal of the assessee is partly allowed

ITA 539/LKW/2014[2008-09]Status: DisposedITAT Lucknow21 Jan 2025AY 2008-09

Bench: Shri Kul Bharat & Shri Anadee Nath Misshra

Section 14A

that every expenditure incurred by the assessee must result in profit. It is sufficient if the expenditure not being in the nature of capital expenditure or personal expenses is laid out or expended wholly and exclusively for the purposes of business. In view of the foregoing, we direct the Assessing

ACIT 13-2-2, Mumbai vs. Sharda Cropchem Limited, Mumbai

In the result, both the above appeals of the Revenue for

ITA 6163/MUM/2024[2018]Status: DisposedITAT Mumbai21 Jan 2025

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

For Appellant: Shri Rohan Deshpande / Ms. ShikhaUpadhayay,ARsFor Respondent: Ms. NeenaJeph,CIT(DR)
Section 135Section 143(3)Section 37Section 80G

correct in deleting the depreciation allowed to the assessee on the disallowance of the Products Registration expenditure of Rs.80,41,02,275/- as capital expenditure. 3. Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) was correct in directing to allow the claim ... assessee enabling it to run its business of selling products on the basis of the registration of the product. Therefore, it was clearly a capital expenditure incurred by the assessee, which was not allowable as revenue expenditure. In view of the facts, the claim of treating product registration charges

Rajnandgaon Petrol Service, Rajnandgaon vs. ACIT, Circle-2(1), Bhilai, Durg

In the result, appeal of the assessee is allowed in terms of the aforesaid observations

ITA 553/RPR/2024[2017-18]Status: DisposedITAT Raipur20 Jan 2025AY 2017-18

Bench: Shri Ravish Soodआयकर अपील सं. / Ita No.553/Rpr/2024 "नधा"रण वष" / Assessment Year : 2017-18 Rajnandgaon Petrol Service Partner : Kulwant Singh Bhatia, Pendri, G.E. Road, Rajnandgaon (C.G.)-491 441 Pan: Aagfr7601E .......अपीलाथ" / Appellant बनाम / V/S. The Assistant Commissioner Of Income Tax, Circle-2(1), Bhilai (C.G.) ……""यथ" / Respondent

For Appellant: None (written submission)For Respondent: Smt. Anubhaa Tah Goel, Sr. DR
Section 143(2)Section 143(3)Section 37(1)

claim of expenditure raised by the assessee is found to be bogus; (ii) the expenditure is in the nature of a capital expenditure or personal expenditure of the assessee; or (iii) that the expenditure had been incurred for any purpose which is an offence or which is prohibited

Lokesh Kumar Aggarwal, Delhi vs. ITO, Ward-45(5), Delhi

In the result, all appeals of the assessee are partly allowed

ITA 1575/DEL/2023[2012-13]Status: DisposedITAT Delhi20 Jan 2025AY 2012-13

Bench: Shri Vikas Awasthy & Shri Brajesh Kumar Singh

Section 10Section 143(2)Section 143(3)Section 144C(13)Section 144C(5)Section 2Section 92C

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘I’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI BRAJESH

Deputy Commissioner of Income Tax, Kolkata vs. Bhawani Construction Pvt. Ltd., Howrah

In the result, the appeal filed by the revenue is dismissed

ITA 1649/KOL/2024[2012-13]Status: DisposedITAT Kolkata17 Jan 2025AY 2012-13

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 143(2)Section 143(3)Section 2(24)(x)Section 264Section 36(1)(va)Section 68

also disallowed an expenditure of Rs. 50,000/- representing preliminary expenses (ROC filing fees) on the ground that the same constituted a capital expenditure. In addition thereto the A.O. made an addition of Rs. 5,220/- on account of delayed deposit of employees' P.F. contribution in the government account

Millennium Developers Private Limited, Mumbai vs. Principle Commissioner of Income Tax -3, Mumbai

In the result the appeal filed by the assessee is allowed

ITA 1847/MUM/2024[2017-18]Status: DisposedITAT Mumbai17 Jan 2025AY 2017-18

Bench: Shri Amarjit Singh & Shri Raj Kumar Chauhanmillennium Developers Pvt. Ltd. Pcit-3, Ground Floor, Ceejay House, Vs. R. No. 612, 6Th Floor, Aayakar Shivsagar Estate, Dr. Annie Besant Bhavan, M. K. Road, Road, Worli, Mumbai – 400 018 Mumbai-400 020 Pan: Aabcm6404C (Appellant) (Respondent) Assessee Represented By : Shri B. V. Jhaveri, Ld. Ar Department Represented By : Shri Anurag Tripathi, Ld. Dr Date Of Conclusion Of Hearing : 18.10.2024 Date Of Pronouncement : 17.01.2025

Section 115JSection 142(1)Section 144Section 144BSection 147Section 148Section 253Section 263Section 37(1)Section 80G

reads as under:- "Any expenditure (not being expenditure of the nature described in section 30 to 36 and not being in the nature of capital expenditure or personal expenditure of the assessee) laid out for or expended wholly and exclusively for the purpose of the business or Profession shall

Samkeet Arya Homes LLP, Ahmedabad vs. The ITO, Ward-3(3)(5), Ahmedabad

In the result, Ground Number 2 of the assessee’s appeal is dismissed

ITA 365/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad16 Jan 2025AY 2017-18

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Ms. Sunjal Shah, A.RFor Respondent: Shri B.P. Srivastava, Sr. DR
Section 68

erred in law and on facts by considering the non-compete fees amounting to Rs. 38,00,000/- to be a capital expenditure without considering the nature of the expenditure. 2. The Ld. AO has erred in law and on facts in making addition

The Vardhman Stampings Pvt. Ltd., Ahmedabad vs. The Asstt. Commissioner of Income Tax, Circle-4(1)(2), Ahmedabad

ITA 363/AHD/2020[2015-16]Status: DisposedITAT Ahmedabad16 Jan 2025AY 2015-16

Bench: Smt.Annapurna Gupta & Shri T.R. Senthil Kumar

Section 263Section 43(5)Section 73

आयकर अपीलीय अधिकरण, अहमदाबाद न्यायपीठ 'A' अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT

The Vardhman Stampings Pvt. Ltd., Ahmedabad vs. The Asstt. Commissioner of Income Tax, Circle-4(1)(2), Ahmedabad

ITA 362/AHD/2020[2014-15]Status: DisposedITAT Ahmedabad16 Jan 2025AY 2014-15

Bench: Smt.Annapurna Gupta & Shri T.R. Senthil Kumar

For Appellant: Shri Manish J. Shah andFor Respondent: Shri H. Phani Raju, CIT-DR
Section 263Section 43(5)Section 73

आयकर अपीलीय अधिकरण, अहमदाबाद न्यायपीठ 'A' अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT

Shahu Shikshan Prasarak Mandal, Latur vs. ACIT (Exmp.) Circle, Aurangabad

In the result, the appeal of the assessee is allowed for statistical

ITA 951/PUN/2024[2020-21]Status: DisposedITAT Pune15 Jan 2025AY 2020-21

Bench: Shri R.K. Panda & Ms. Astha Chandra

For Appellant: Shri Suhas P. BoraFor Respondent: Shri Ajay Kumar Keshari
Section 10Section 12ASection 142(1)Section 143(3)Section 144BSection 56Section 57

states as under: In order to claim the expenditure u/s. 57(iii), assessee must satisfy the following conditions. a) It should not be a capital expenditure, b) Expenditure incurred should be wholly and exclusively for its earnings or making profit, c) It should not be a personal expenses ... Your honour, on examining the financial statements and details submitted herewith, it is obvious that, it is not a capital expenditure, because, the Government Grant, which was received specifically for payment of salary has been used for the same purpose. As a result, it is beyond doubt that, payment

Mahle Behr India Pvt. Ltd., Pune vs. Deputy Commissioner of Income-Tax, Pune

ITA 795/PUN/2017[2012-13]Status: DisposedITAT Pune15 Jan 2025AY 2012-13

Bench: Shri R. K. Panda & Ms. Astha Chandra

For Respondent: Shri R D Onkar
Section 143(3)Section 35Section 35(1)

account of R & D expenditure u/s 35(2AB), is of only Rs.5.16 Crores (revenue expenditure of Rs.4.74 Crores @ 100% approved by DSIR and capital expenditure of Rs.21 Lakhs 200% approved by DSIR). Therefore, the assessee's claim of deauction u/s 35(2AB) was restricted to Rs.5 16 Crores, as against ... case for the preceding year A.Y. 2011-12 and on the backdrop of same set of facts the Tribunal has held that the said capital expenditure on R & D is eligible for 100% deduction u/s 35 (1) (iv) read with 35 (2) of the Act consequent to denial of claim

Tapan Kanti Roy, Kolkata, West Bengal vs. Assistant Commissioner of Income Tax, Circle 36, Kolkata, West Bengal

In the result, the appeal filed by the assessee is allowed for statistical

ITA 1055/KOL/2023[2017-2018]Status: DisposedITAT Kolkata15 Jan 2025AY 2017-2018
Section 142(1)Section 143(2)Section 144Section 145(1)Section 145(2)Section 250

corrections and the A.O had not pointed out any more discrepancies in the revised audit report. Secondly. whether interest expenses qualify as revenue or capital expenditure is a question of allowability of deduction of expenses from taxation point of view. It cannot be a defect found in the books from

The Lakshmi Mills Company Limited, Coimbatore vs. ACIT Corporate Circle - 2, Coimbatore

The appeal stand partly allowed in terms of our above order

ITA 364/CHNY/2024[2014-15]Status: DisposedITAT Chennai15 Jan 2025AY 2014-15

Bench: Hon’Ble Shri Aby T. Varkey, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ Ita No.364/Chny/2024 (िनधा*रण वष* / Assessment Year: 2014-15) The Lakshmi Mills Company Ltd. Acit बनाम/ 686, Avanashi Road, Corporate Circle-2, Vs. Coimbatore -641 037. Coimbatore. "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aaact-7564-R (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri T. Banusekar (Advocate) – Ld. Ar ""थ"कीओरसे/Respondent By : Shri Nilay Baran Som (Cit) -Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 31-12-2024 घोषणाकीतारीख /Date Of Pronouncement : 15-01-2025 आदेश / O R D E R

For Appellant: Shri T. Banusekar (Advocate) – Ld. ARFor Respondent: Shri Nilay Baran Som (CIT) -Ld. DR
Section 115JSection 143(3)

that the expenditure incurred towards replacement of old worn out drafting system in the spindlier in the ring frames is revenue expenditure and not capital expenditure. 6. For that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.14,60,000/- being charges incurred towards scheduling